P&G Restructures Nigerian Operations: Nigeria to Transform into Import Hub as Macro Challenges Persist
Consumer goods giant Procter & Gamble (P&G) has announced plans to restructure its operations in Nigeria, transitioning the country into an import-focused market.
The revelation came during a presentation by the Chief Financial Officer, Andre Schulten, at the Morgan Stanley Global Consumer & Retail Conference.
Schulten cited the challenging business environment in Nigeria, particularly as a dollar-denominated organisation, as the driving force behind this strategic decision.
He stated, “It gets increasingly difficult to operate and create U.S dollar value. So when you think about places like Nigeria and Argentina, it is difficult for us to operate because of the macroeconomic environment.”
P&G aims to streamline its operations and focus on markets with the highest potential, leading to the restructuring programme that will predominantly impact Nigeria and Argentina.
The company envisions transforming Nigeria into an import-only market, thereby dissolving its on-ground footprint and reverting to an import-centric model.
This move aligns with P&G’s commitment to maintaining portfolio discipline and concentrating on markets that offer the most promising growth prospects.
Responding to queries about the potential impact on the overall group’s portfolio, Schulten clarified that Nigeria contributes $50 million in net sales to P&G’s business, which, compared to the company’s extensive portfolio worth $85 billion, is not expected to have a substantial effect on the group’s balance sheet in terms of sales or profitability.
The decision follows a trend observed in Nigeria, where other foreign USD-denominated companies, such as GSK, have also ceased operations, attributing challenges in repatriating U.S. dollars outside the country to the prevailing macroeconomic conditions.
The Central Bank has acknowledged a forex backlog of approximately $7 billion, indicating the difficulties faced by foreign entities in accessing foreign exchange.
While President Tinubu has implemented reforms to attract foreign investment into Nigeria, the immediate impact appears to be a challenge, causing more hardship in the short term for these international corporations operating in the country.
Source: Nairametrics
